soon ends up in another bank.
So,
for the banking system as a whole,
most loans are in reality deposits,
and there is no such thing as a shortage of money.
No, Anthony, things aren't so simple! The interest rates in the USA are really low and all, but in many other countries, they are significant. Banks need to work hard to make the money they need to finance their interest obligations.
And except for the USA, other countries -- even the "devloped" and "powerful" ones like Britain -- can't conjure money by printing. If they do it, their money will automatically end up being able to buy less, which is as good as having only as much money as they started with.
The distinguished economist David Graeber begs to differ. Read his article here: http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity in which he discusses the Bank of England's recent revelation.
No, Anthony, things aren't so simple! The interest rates in the USA are really low and all, but in many other countries, they are significant. Banks need to work hard to make the money they need to finance their interest obligations.
ReplyDeleteAnd except for the USA, other countries -- even the "devloped" and "powerful" ones like Britain -- can't conjure money by printing. If they do it, their money will automatically end up being able to buy less, which is as good as having only as much money as they started with.
The distinguished economist David Graeber begs to differ. Read his article here:
ReplyDeletehttp://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity
in which he discusses the Bank of England's recent revelation.